by Calculated Risk on 4/03/2011 11:48:00 PM

Earlier:
• Summary for Week ending April 1st
• Schedule for Week of April 3rd
• All employment graphs

On 60 Minutes: Really just old news, but you can read the 60 Minutes story here ... or watch the video below.

by Calculated Risk on 4/03/2011 06:10:00 PM

Tracking the participation rate for various age groups monthly is a little like watching grass grow, but the trends are important.

If the Civilian noninstitutional population (over 16 years old) grows by about 2 million per year - and the participation rate stays flat - the economy will need to add about 100 thousand jobs per month to keep the unemployment rate steady at 8.8%.

If the population grows faster (say 2.5 million per year), and/or the participation rate rises, it could take significantly more jobs per month to hold the unemployment rate steady. As an example, if the working age population grows 2.5 million per year and the participation rate rises to 65% (from 64.2%) over the next two years, the economy will need to add 200 thousand jobs per month to hold the unemployment rate steady.

That is why forecasting the participation rate is important - and why reports of the number of jobs needed to hold the unemployment rate steady are all over the place (and can be very confusing - and I'm guilty of using different numbers).

Click on graph for larger image in graph gallery.

Here is a repeat of the graph showing the participation rate, unemployment rate, and employment-to-population ratio.

The Labor Force Participation Rate was unchanged at 64.2% in March (blue line). This is the lowest level since the early '80s. This is the percentage of the working age population in the labor force.

Here is a look at some the long term trends (updating graphs through March 2011):

This graph shows the changes in the participation rates for men and women since 1960 (in the 25 to 54 age group - the prime working years).

The participation rate for women increased significantly from the mid 30s to the mid 70s and has mostly flattened out. The participation rate for men has decreased from the high 90s to 88.7% in March 2011. (down slightly from February)

There will probably be some "bounce back" for both men and women (some of the recent decline is probably cyclical), but the long term trend for men is down.

This graph shows that participation rates for several key age groups.

There are a few key long term trends:
• The participation rate for the '16 to 19' age group has been falling for some time (red). This increased in March to 34.1% from the record low 33.5% in February.

• The participation rate for the 'over 55' age group has been rising since the mid '90s (purple), although this has stalled out a little recently (perhaps cyclical).

• The participation rate for the '20 to 24' age group fell recently too (perhaps more education before joining the labor force). This appears to have stabilized, and I expect the participation rate to increase for this cohort as the job market improves.

The third graph shows the participation rate for several over 55 age groups. The red line is the '55 and over' total seasonally adjusted. All of the other age groups are Not Seasonally Adjusted (NSA).

The participation rate is generally trending up for all older age groups. The '65 to 69' age group hit a new record high in March!

The increase in participation of older cohorts might push up the overall participation rate over the next few years, however eventually the 'over 55' participation rate will start to decline as the oldest baby boomers move into even older age groups.

I've been expecting some small bounce back in the participation rate, but I don't think the bounce back will be huge - and that means it will take fewer jobs than some expect to lower the unemployment rate. This will be a key number to watch over the next few years.

by Calculated Risk on 4/03/2011 11:55:00 AM

By request, here are a few more employment graphs ...

Duration of Unemployment
Click on graph for larger image in graph gallery.

This graph shows the duration of unemployment as a percent of the civilian labor force. The graph shows the number of unemployed in four categories: less than 5 week, 6 to 14 weeks, 15 to 26 weeks, and 27 weeks or more.

In general, all four categories are trending down. The less than 5 week category appears to be back to normal (fits with the initial weekly claims data).

Unfortunately the "27 weeks or more" category increased slightly in March to 6.122 million workers (about 4% of the labor force). This remains extremely high, and long term unemployment remains a serious problem.

Unemployment by Education
This graph shows the unemployment rate by four levels of education (all groups are 25 years and older).

This data only goes back to 1992 and only includes one previous recession (the stock / tech bust in 2001). Clearly education matters with regards to the unemployment rate - and it appears all four groups are now trending down with some month-to-month volatility - although the unemployment rate for the college educated has increased two months in a row.

Diffusion Indexes
This is a little more technical. The BLS diffusion index for total private employment was at 62.4 in March, down from 68.7 in February. For manufacturing, the diffusion index decreased to 63.0 from 66.0 in February.

Think of this as a measure of how widespread job gains are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS. From the BLS:

Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.

Even though the diffusion indexes declined in March, the level of both indexes is still fairly high - so hiring is still fairly widespread.

Best to all

Earlier:
• Summary for Week ending April 1st
• Schedule for Week of April 3rd
• All employment graphs

by Calculated Risk on 4/03/2011 08:30:00 AM

Earlier:
• Summary for Week ending April 1st

This will be a light week for economic data.

Note: Reis is expected to release their Q1 Office, Mall and Apartment vacancy rate reports this week. These reports have been showing "stabilizing" vacancy rates for offices and malls, and falling vacancy rates for apartments.

----- Monday, April 4th -----
9:05 AM ET: Atlanta Fed President Dennis Lockhart speaks in Palm Beach, Florida.

7:15 PM ET: Fed Chairman Ben Bernanke, "Clearinghouses and Financial Stability", At the Federal Reserve Bank of Atlanta 2011 Financial Markets Conference, Stone Mountain, Georgia

----- Tuesday, April 5th -----
10:00 AM: ISM non-Manufacturing Index for March. The consensus is for a slight decrease to 59.5 from 59.7 in February.

Click on graph for larger image in graph gallery.

This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index. The February ISM Non-manufacturing index was at 59.7%, up from 59.4% in January. The employment index indicated faster expansion in February at 55.6%, up from 54.5% in January. Note: Above 50 indicates expansion, below 50 contraction.

12:45 PM: Minneapolis Federal Reserve Bank President Narayana Kocherlakota speaks "The impact of, and response to, industry forces on homeownership in Emerging Markets"

2:00 PM: FOMC Minutes, Meeting of March 15, 2011. The minutes might contain hints about the recent disagreements on QE2, and possibly a discussion about the recently announced post-meeting press conferences.

----- Wednesday, April 6th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index has been very weak over the last couple months suggesting weak home sales through the first few months of 2011.

----- Thursday, April 7th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for a decrease to 385,000 from 388,000 last week.

3:00 PM: Consumer Credit for February. The consensus is for a $4.8 billion increase in consumer credit.

----- Friday, April 8th -----
10:00 AM: Monthly Wholesale Trade: Sales and Inventories for February.

Best wishes to All!

by Calculated Risk on 4/02/2011 08:01:00 PM

Catching up (and feeling much better today) ... the Census Bureau reported yesterday that overall construction spending decreased in February compared to January (seasonally adjusted).

[C]onstruction spending during February 2011 was estimated at a seasonally adjusted annual rate of $760.6 billion, 1.4 percent (±1.4%)* below the revised January estimate of $771.0 billion. The February figure is 6.8 percent (±1.6%) below the February 2010 estimate of $815.8 billion.

Private construction spending also decreased in February:

Spending on private construction was at a seasonally adjusted annual rate of $468.0 billion, 1.4 percent (±1.3%) below the revised January estimate of $474.6 billion. Residential construction was at a seasonally adjusted annual rate of $228.5 billion in February, 3.7 percent (±1.3%) below the revised January estimate of $237.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $239.6 billion in February, 0.9 percent (±1.3%)* above the revised January estimate of $237.4 billion.

Click on graph for larger image in graph gallery.

This graph shows private residential and nonresidential construction spending since 1993. Note: nominal dollars, not inflation adjusted.

Residential spending is 66% below the peak in early 2006, and non-residential spending is 42% below the peak in January 2008.

As I mentioned in the weekly summary, the story remains the same - manufacturing is expanding and anything housing related is still struggling.

Earlier:
• Summary for Week ending April 1st

by Calculated Risk on 4/02/2011 04:56:00 PM

The National Federation of Independent Business (NFIB) will release their March survey on Tuesday, April 12th, but here is a pre-release of the employment data ... from NFIB: NFIB Jobs Statement: Main Street Adds Jobs for Second Consecutive Month

“The positive job creation observed in February was repeated again in March (sigh of relief here), confirming that the number of net new jobs reported on Main Street was decidedly positive. Employment gains have not been this good since 2007.

“The percent of owners reporting hard to fill job openings was unchanged at 15 percent, supporting the modest reductions in the unemployment rate recently observed. Unfortunately, the net percent of owners planning to create new jobs (increasing the total number of workers employed) lost three points, falling to a net 2 percent of all firms, low, but still 12 points better than the recession low reading of negative 10 percent reached in March 2009.

Click on graph for larger image in graph gallery.

This graph shows the net hiring plans for the next three months.

Hiring plans decreased in March, but are still positive.

Small businesses have a larger percentage of real estate and retail related companies than the overall economy. With the high percentage of real estate (including small construction companies), I expect small business hiring to be slow to recover in this cycle.

Earlier:
• Summary for Week ending April 1st